Apollo Group, Inc. (APOL), a for-profit education company, on Tuesday reported better than expected revenue and profit for the second quarter, helped by strong growth in degreed enrolment at the University of Phoenix. The company also said its chief financial officer Joseph D'Amico will assume the newly created position of chief operating officer.
The Phoenix, Arizona-based company reported net income for the second quarter of $125.3 million or $0.77 per share, compared to a net loss of $32.0 million or $0.19 per share for the year-ago quarter.
The year-ago quarter results included a pre-tax charge of $168.4 million, which represented an accrual for estimated damages stemming from an adverse jury verdict in a securities class action lawsuit. That charge was reversed during the fourth quarter of fiscal 2008, when the trial court vacated the judgment. Excluding that charge, net income for the second quarter of fiscal 2008 was $70.3 million or $0.41 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.65 per share for the second quarter. Analysts' estimates typically exclude special items.
Net revenue for the second quarter rose 26.3% to $876.13 million from $693.64 million in the same quarter last year. Sixteen analysts had a consensus revenue estimate of $865.45 million for the second quarter.
The attributed the revenue growth to a 20.4% increase in University of Phoenix total degreed enrollment to 397,700. Second quarter new degreed enrolment grew 23% to 80,000.
We are pleased with the growth in revenue and enrollments in our second quarter and we believe we are continuing to benefit from investments we are making in key academic and operational areas, said Chas Edelstein, Chief Executive Officer of Apollo Group.
Selling and promotional expenses for the quarter rose 11.9% to $225.7 million from $201.7 million a year ago. As a percentage of net revenue, selling and promotional expenses declined 330 basis points to 25.8% from 29.1% last year, mainly due to improvement at University of Phoenix. Additionally, investments in marketing resulted in more effective and efficient advertising at University of Phoenix, the company said and added that it continues to invest in marketing to build greater brand identity as well as to drive and support future enrollment growth.
For the first six months, the company reported net income of $305.7 million or $1.89 per share, compared to $107.8 million or $0.63 per share for the same period last year. Excluding the litigation charge, last fiscal year's first-half net income was $210.1 million or $1.24 per share.
Net revenue for the first-half increased 25.3% to $1.85 billion from $1.47 billion in the prior year period.
Additionally, the company said it has appointed Joseph D'Amico, its president and chief financial officer, to the newly created position of chief operating officer. He will retain the president title.
The company also said it has promoted Brian Swartz to Senior Vice President, Chief Financial Officer and Treasurer. Swartz previously served under D'Amico as the Senior Vice President of Finance and Chief Accounting Officer.
Gregory Iverson, who currently serves as the company's Vice President and Controller, will assume the additional role of Chief Accounting Officer.
D'Amico, who joined Apollo Group as interim Chief Financial Officer in November 2006, has been President since June 2008 and Executive Vice President and Chief Financial Officer since June 2007. He was appointed Treasurer in December 2007.
Among others in the industry, Career Education Corp. (CECO) last month reported fourth quarter profit that more than tripled from last year despite lower revenue, as the company incurred fewer costs related to school closures compared with the year-earlier quarter.
Apollo Group shares, which have traded in a range of $37.92 to $90.00 over the past year, closed Tuesday's regular trading session at $78.33, down 61 cents and lost an additional $4.43 or 5.53% in after hours trading.
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